Are water stocks a good investment?

Water stocks are mostly utilities, which makes them excellent stocks for investors looking for safety and dividend payments. Additionally, a number of water stocks have outperformed the market in recent history, driven by acquisitions and increasing pay rates.

What stocks to buy for water shortage?

Investors looking for an angle into water shortages and related crises can consider desalination stocks like Veolia Environment, the world's biggest desalination company, or Consolidated Water. They might also want to consider water purification and treatment stocks like Xylem and Ecolab.

What is the most profitable water company?

Based on net income, American Water Works is the most profitable water company, reporting $1.11 billion in 2024.

Do water stocks pay dividends?

Yes, water stocks typically pay dividends. Many of them are utilities, and utilities almost always pay dividends. They are generally slow-growth companies, so paying dividends is a valuable tool to deliver returns for investors.

Who are the major shareholders in the water companies?

Water stocks are popular with institutional investors and investment management companies like BlackRock (NYSE: BLK), Vanguard, and State Street, as they are the kind of reliable, dividend-paying stocks that fit well with a conservative investment style.

Best Water Stocks for 2026 and How to Invest

Learn more about the best opportunities for investing in water utilities and other water stocks.

By Jeremy Bowman – Updated May 14, 2026 at 11:29 PM EST | Fact-checked by Frank Bass

Key Points

American Water Works leads with a $25 billion market cap and a 3.30% dividend yield.
York Water shows stable growth, serving over 81,000 households and a 3.1% dividend yield.
Essential Utilities, merging with American Water Works, offers a diverse utility portfolio.

Water may be a commodity that you don't think about when it comes out of the tap, but it's also the source of a multi-billion-dollar business for water stocks. Let's take a deeper dive into the top water stocks for 2026.

Top seven water stocks in 2026

Loading paragraph...

Ticker Information Table
Name and ticker	Market capMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.	Dividend yield	Industry
American Water Works (NYSE:AWK)	$26.3 billion	2.51%	Water Utilities
York Water (NASDAQ:YORW)	$494.5 million	2.96%	Water Utilities
Essential Utilities (NYSE:WTRG)	$11.1 billion	3.51%	Water Utilities
American States Water (NYSE:AWR)	$3.3 billion	2.42%	Water Utilities
Middlesex Water (NASDAQ:MSEX)	$1.0 billion	2.54%	Water Utilities
Xylem (NYSE:XYL)	$28.7 billion	1.38%	Machinery
Primo Brands (NYSE:PRMB)	$9.0 billion	1.77%	Beverages

Data as of Jul 8, 2026. Showing 7 of 7 total entries.

Loading ticker_table...

1. American Water Works

NYSE: AWK

American Water Works

Today's Change

(1.30%) $1.73

Current Price

$134.82

Key Data Points

Market Cap

$26B

Day's Range

$134.26 - $138.42

52wk Range

$120.57 - $147.87

Volume

19.4

Avg Vol

2.2M

Gross Margin

43.25%

Dividend Yield

2.51%

Loading company_card...

American Water Works may provide one of the best examples of how boring stocks can quietly beat the market. Founded in 1886, the water utility went public at $21.50 a share in May 2008 and was hovering around $130 a share in August 2025; its return is even higher with dividends reinvested.

American Water Works is the country's largest water utility stock. Like other utilities, it benefits from being a regulated monopoly, so the company doesn't face competition in the regions where it operates. In exchange, its prices are regulated by state and local governments.

Over the years, American Water Works has grown by investing in its own infrastructure, through acquisitions, and by seizing opportunities in market-based businesses such as its military services group.

The company plans to continue investing in the business, forecasting at least $40 billion in investments, including infrastructure improvements and acquisitions, over the next decade. It also completed 26 acquisitions in 2022, 23 in 2023, 13 in 2024, and 18 in 2025.

American Water Works' earnings multiple expanded considerably over the decade when interest rates were low, as the low-interest rate environment caused investors to rotate from bonds into dividend stocks and lifted stock market multiples more generally. After slumping through 2022 and 2023, the stock regained some of those losses in 2024 as the Federal Reserve began to cut interest rates, and it's mostly traded sideways in 2025 and 2026.

It's worth keeping an eye on interest rates, but the company's size gives it an advantage in scalability and in making acquisitions. It paid a quarterly dividend of $3.58, or a 2.8% yield, as of May 2026.

2. York Water Company

Loading paragraph...

NASDAQ: YORW

York Water

Today's Change

(-0.91%) $-0.28

Current Price

$30.51

Key Data Points

Market Cap

$495M

Day's Range

$30.36 - $31.57

52wk Range

$28.26 - $34.30

Volume

392K

Avg Vol

155.7K

Gross Margin

54.58%

Dividend Yield

2.96%

Loading company_card...

York Water Company, founded in 1816, is the oldest investor-owned water utility in the U.S. The company sources, purifies, and distributes drinking water within three counties in south-central Pennsylvania. It also owns two wastewater collection systems and five wastewater collection and treatment facilities.

Because it's a water utility, York's growth is determined by its number of customers, as well as water and wastewater rates. Since it can't directly control prices, the best way for the company to grow is by increasing its customer base.

York Water has made a number of acquisitions in its territory to boost growth, but it operates in a slow-growing part of the country. The company's total customer count increased slightly from 71,411 at the end of 2019 to 81,292 households at the end of 2024.

Its 2025 revenue increased 3.3% to $77.5 million, and the company is also highly profitable, with an operating margin of 36% in 2025.

York Water pays a dividend yield of 3.1%, and its payout ratio is around 60%, meaning that investors can count on a continuing dividend. It's also paid 622 consecutive quarterly dividends, which is believed to be the record for any U.S. company.

3. Essential Utilities

Loading paragraph...

NYSE: WTRG

Essential Utilities

Today's Change

(1.09%) $0.42

Current Price

$39.08

Key Data Points

Market Cap

$11B

Day's Range

$38.93 - $40.16

52wk Range

$36.10 - $42.37

Volume

1.5M

Avg Vol

2.1M

Gross Margin

38.73%

Dividend Yield

3.51%

Loading company_card...

Essential Utilities, formerly known as Aqua America, is a water and natural gas utility that serves about 5 million people under the Aqua and Peoples brand.

The company started as a utility in southeastern Pennsylvania and has grown into a presence across 10 states. It focuses on regulated water and wastewater, along with other utilities. In 2020, it entered the natural gas business by acquiring Peoples Natural Gas Company, which gave it 750,000 gas utility customers in three states.

About 60% of Essential Utilities' revenue now comes from water, and the rest from natural gas. The company is focused on growing in areas where it has a critical mass of operations to gain scale and increase efficiency.

Residential water companies have historically increased revenue by about 1% per year -- a reminder that utilities tend to be a slow-growth industry -- but rising rates have helped, and acquisitions have given the boost earlier in the decade. In 2025, revenue rose 18.6% to $2.47 billion, driven by rate increases and a jump in heating degree days due to colder weather. The company is also solidly profitable, with a net profit margin of 25%.

Essential Utilities currently offers a 3.7% dividend yield and has a long history of raising its dividend.

However, Essential Utilities' time as a standalone publicly traded company, appears to be coming to an end as it agreed to merge with the larger American Water Works, which is expected to close by the end of the first quarter of next year.

Loading paragraph...

4. American States Water Company

NYSE: AWR

American States Water

Today's Change

(0.05%) $0.04

Current Price

$83.18

Key Data Points

Market Cap

$3.3B

Day's Range

$82.94 - $85.63

52wk Range

$69.45 - $85.63

Volume

Avg Vol

366.6K

Gross Margin

50.39%

Dividend Yield

2.42%

Loading company_card...

American States Water Company is a diversified utility company with several subsidiaries and three segments, including water, electric, and contracted services.

As of the end of 2025, the company's regulated utilities had about 265,100 water customers and approximately 24,900 electric customers. It also has a number of military contracts.

A majority of its revenue comes from Golden State Water Company, a subsidiary involved in the purchasing, production, and distribution of water in 10 California counties.

Like other utilities, American States Water Company benefits from a lack of competition. Customer growth has been sluggish, but its water business benefited from a rate hike in 2025, which drove overall revenue up 11% to $658.1 million.

American States Water Company has been less acquisitive than other water utilities, although its profits have grown steadily, from $1.62 per share in 2016 to $3.37 in 2025. The company has kept costs relatively flat even as rates have ticked up.

American States Water has also been a reliable dividend payer, offering a dividend yield of 2.6% as of May 2026.

5. Middlesex Water Company

Loading paragraph...

NASDAQ: MSEX

Middlesex Water

Today's Change

(-1.43%) $-0.81

Current Price

$55.82

Key Data Points

Market Cap

$1.0B

Day's Range

$55.79 - $58.10

52wk Range

$44.17 - $62.17

Volume

177.8K

Avg Vol

161.5K

Gross Margin

39.32%

Dividend Yield

2.54%

Loading company_card...

Middlesex Water Company was founded in 1897 and operates regulated water and wastewater utility systems in New Jersey and Delaware. It has approximately 131,000 customers across the two states.

Middlesex's revenue has grown steadily over the past decade, and revenue jumped 2% to $194.7 million in 2025, while profits fell, and net income jumped fell 3% to $42.8 million, due to lower other income, which is a one-time event.

Middlesex sees four issues affecting its net income: Weather, rate relief, effective cost management, and customer growth.

The company has been a reliable dividend stock over the years and regularly increases its payout. In May 2026, Middlesex posted a 2.7% dividend yield. It has a payout ratio of about 60%, so it should be able to easily increase its dividend in the coming years.

Loading paragraph...

6. Xylem

NYSE: XYL

Xylem

Today's Change

(1.03%) $1.23

Current Price

$120.65

Key Data Points

Market Cap

$29B

Day's Range

$117.92 - $120.86

52wk Range

$105.29 - $154.27

Volume

393.7

Avg Vol

2.2M

Gross Margin

38.48%

Dividend Yield

1.38%

Loading company_card...

Xylem isn't a water utility but a water technology company. It makes a wide range of products to handle the transportation and treatment of water, pumping and heating, and measurement for meters and data analytics.

With a unique business model, Xylem has no single competitor, but it competes against a wide array of companies across its three business segments. It estimates its total served market to be $60 billion in the segments it operates -- about 10% of a larger addressable market of $600 billion in the global water industry.

The company sees opportunities in emerging markets as clean water becomes more accessible through technological innovation.

Xylem's revenue rose 5% in 2025 to $9 billion, boosted by its acquisition of Evoqua Water Technologies. Evoqua provides water treatment solutions, creating an industry leader.

Historically, Xylem has been solidly profitable, although its profits have fluctuated. Earnings per share rose 7% on an adjusted basis to $3.92 in 2025.

Xylem has regularly raised its dividend since its initial public offering (IPO) in 2011, and it paid a 1.6% dividend yield in May 2026.

7. Primo Brands Corporation

Loading paragraph...

NYSE: PRMB

Primo Brands

Today's Change

(-1.50%) $-0.38

Current Price

$24.90

Key Data Points

Market Cap

$9.0B

Day's Range

$24.64 - $25.53

52wk Range

$14.36 - $30.64

Volume

0.2

Avg Vol

3.8M

Gross Margin

30.99%

Dividend Yield

1.77%

Loading company_card...

The Primo Water brand may be best known for its exchangeable water tanks, available at big-box stores, but the current Primo Brands is the result of two mergers. First, beverage company Cott Corporation acquired Primo Water in March 2020. Cott sold its coffee and tea business and rebranded as Primo Water to become a pure-play water company. Then, in November 2024, Primo Water and BlueTrition Brands merged, creating a beverage company focused on healthy hydration. In addition to Primo Water, it also includes brands like Poland Spring, Pure Life, and Saratoga.

Primo Water grew its revenue by 29% in 2025 to $6.7 billion, with a boost at the end of the year from the merger.

On an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) basis, the company's margins are about 16%, and its generally accepted accounting principles (GAAP) profit is closer to breakeven because of its heavy debt burden of about $5 billion.

Still, the company is delivering steady growth and offers investors a unique opportunity as a rare pure-play water consumption stock.

How to invest in water stocks

If you're interested in buying water stocks, the process is the same as it would be for buying any stocks. Just follow the steps below.

Open your brokerage app: Log in to your brokerage account where you handle your investments.
Search for the stock: Enter the ticker or company name into the search bar to bring up the stock's trading page.
Decide how many shares to buy: Consider your investment goals and how much of your portfolio you want to allocate to this stock.
Select order type: Choose between a market order to buy at the current price or a limit order to specify the maximum price you're willing to pay.
Submit your order: Confirm the details and submit your buy order.
Review your purchase: Check your portfolio to ensure your order was filled as expected and adjust your investment strategy accordingly.

Loading paragraph...

Benefits and risks of investing in water stocks

There are a number of benefits and risks to investing in water stocks. Let's take a look at the benefits first:

Water's essential nature means it will always be in demand and have a variety of applications.
Water is a key input in everything from food and beverages to the cleaning of semiconductor wafers and hydraulic fracturing (fracking).
Climate change is making water scarcer, driving up its value as well as innovative solutions to expand access to drinking water.
Desalination, already used in tropical islands, is a growth opportunity in the water industry.
Most water stocks are utilities, meaning they tend to be safe, dividend-paying, recession-proof stocks.

Risks:

Water stocks are generally slow-growth so you may miss out on the upside potential of other sectors.
Revenue growth is often dependent on rate hikes, which are determined by regulatory bodies, outside of the direct control of the utilities.
Acquisitions are common in the industry, which tend to lead to large debt balances.

Should you invest in water stocks?

Water stocks have had an average 2026, but most of these stocks have outperformed the S&P 500 index over the past decade. During one of the greatest bull market runs in stock market history, that's an impressive feat for a group of dividend-paying, recession-proof stocks in what's seen as the relatively safe and sleepy utilities industry.

With this track record, diversifying your portfolio with some water stocks looks like a smart move, especially given their position as a possible hedge against climate change.

Loading paragraph...

FAQ

Investing in Water Stocks FAQ

Loading faq...

About the Author

Jeremy Bowman has been a contributing Motley Fool stock market analyst, covering technology, consumer goods, and macroeconomic trends since 2011. Before The Motley Fool, Jeremy was a newspaper reporter, restaurant manager, and English teacher abroad. He holds a bachelor’s degree in English from Colorado College and a master’s degree in business administration from American University. One of his Motley Fool headlines was briefly featured on Late Night with Stephen Colbert.

TMFHobo

@TMFBowman

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Primo Brands and Xylem. The Motley Fool has a disclosure policy.

Best Water Stocks for 2026 and How to Invest

Learn more about the best opportunities for investing in water utilities and other water stocks.

Key Points

Top seven water stocks in 2026

1. American Water Works

Key Data Points

2. York Water Company

Key Data Points

3. Essential Utilities

Key Data Points

4. American States Water Company

Key Data Points

5. Middlesex Water Company

Key Data Points

6. Xylem

Key Data Points

7. Primo Brands Corporation

Key Data Points

How to invest in water stocks

Benefits and risks of investing in water stocks

Should you invest in water stocks?

Related investing topics

Best Consumer Discretionary Stocks to Buy in 2026 and How to Invest in Them

Top Agriculture Stocks for 2026 and How to Invest

Best Food Stocks to Buy in 2026: Are They Right For Your Portfolio?

Best Stocks to Buy Now: Our Buy-and-Hold Picks for July 2026

FAQ

Investing in Water Stocks FAQ

Are water stocks a good investment?

Are water stocks a good investment?

What stocks to buy for water shortage?

What stocks to buy for water shortage?

What is the most profitable water company?

What is the most profitable water company?

Do water stocks pay dividends?

Do water stocks pay dividends?

Who are the major shareholders in the water companies?

Who are the major shareholders in the water companies?

About the Author

Read Next

Stocks Mentioned

Motley Fool Stock Advisor’s Latest Pick

Premium Investing Services

Top seven water stocks in 2026

Key Data Points

2. York Water Company

Key Data Points

3. Essential Utilities

Key Data Points

Key Data Points

5. Middlesex Water Company

Key Data Points

Key Data Points

7. Primo Brands Corporation

How to invest in water stocks

Benefits and risks of investing in water stocks

Should you invest in water stocks?

Best Consumer Discretionary Stocks to Buy in 2026 and How to Invest in Them

Top Agriculture Stocks for 2026 and How to Invest

Best Food Stocks to Buy in 2026: Are They Right For Your Portfolio?

Best Stocks to Buy Now: Our Buy-and-Hold Picks for July 2026

Investing in Water Stocks FAQ

Are water stocks a good investment?

Are water stocks a good investment?

What stocks to buy for water shortage?

What stocks to buy for water shortage?

What is the most profitable water company?

What is the most profitable water company?

Do water stocks pay dividends?

Do water stocks pay dividends?

Who are the major shareholders in the water companies?

Who are the major shareholders in the water companies?

Key Data Points